On July 15, 2025, Prime Minister François Bayrou unveiled his initial proposals for the 2026 French budget. Still at the draft stage, these announcements aim to reduce the public deficit to 4.6% of GDP — a target requiring €43.8 billion in additional savings compared to 2025. While strongly criticized by the opposition, the proposed measures outline a new budgetary direction based on fiscal discipline, reduced public spending, and increased contributions from high-income households. Below is an overview of the key tax-related initiatives under consideration.
A Proposed “Fiscal Freeze” for 2026
A central proposal is the implementation of a “fiscal freeze”: the income tax brackets, the General Social Contribution (CSG), retirement pensions, and social benefits would all remain fixed at 2025 levels, with no adjustment for inflation.
This across-the-board freeze, described as an exceptional budget control measure, is expected to generate nearly €7 billion in savings. It would not apply to military expenditures or debt service.
Elimination of Two Public Holidays
To boost productivity, the government plans to eliminate two public holidays starting in 2026. While not officially confirmed, Easter Monday and May 8 (Victory Day) have been mentioned as likely candidates. The goal is to increase the number of effective working days per year without altering the legal workweek.
A New Levy on High-Income Households
Bayrou also announced a new exceptional solidarity contribution, targeting high-income households. While the specifics have not yet been disclosed, the thresholds could align with those used for the existing “exceptional contribution on high incomes” (CEHR), i.e., €250,000 for single taxpayers and €500,000 for couples.
This measure is framed as a step toward greater fiscal fairness, requiring higher earners to contribute more to national recovery efforts.
Reform of the 10% Deduction on Retirement Income
A technical but symbolically important reform is also proposed: the elimination of the 10% fixed deduction for professional expenses currently applied to pensions. This would be replaced by a flat-rate allowance, more targeted at small and medium-sized pensions.
While the government has stated that modest retirees would not be affected, the change could lead to increased tax liabilities for individuals receiving significant supplementary pensions.
Review of Inefficient Tax Breaks
The government plans a targeted overhaul of tax expenditures (niches fiscales) as part of an upcoming bill to combat tax and social fraud. The focus will be on costly or underperforming schemes, especially those that fail to stimulate investment or growth. Special attention will be given to non-productive assets and certain optimization practices.
The reform may result in the elimination of certain regimes or the tightening of existing limits.
Tax on Low-Value Imported Parcels
To address unfair competition, the government is considering a new tax on imported parcels under €150, aimed particularly at non-EU goods that currently avoid VAT. This protectionist measure is intended to support local businesses against pressure from global e-commerce platforms.
Local Authorities and Healthcare Cost Containment
Local governments will also be asked to contribute approximately €5.3 billion through renewed levies on certain tax revenues and targeted adjustments based on their financial standing.
In addition, a €5 billion reduction in public healthcare spending is planned for 2026, as part of a broader strategy to restore balance to the French Social Security system by 2029.
Key Takeaways
These proposals — expected to form the core of the upcoming 2026 Finance Bill — mark a shift toward tighter budgetary control, with fiscal policy as a central adjustment lever. The freeze on tax brackets, the creation of a high-income levy, the reassessment of outdated tax benefits, and the challenge to entrenched entitlements all signal a decisive change in fiscal direction.
Final decisions will be made during the parliamentary debate in autumn 2025. For now, it is essential for taxpayers, business owners, and investors to monitor how these measures evolve and whether they are enacted with effect from January 1, 2026.
While it remains premature to draw definitive conclusions, these announcements suggest that France’s 2026 fiscal environment could become more restrictive, focusing on expenditure control, increased contributions from top earners, and a more selective approach to tax relief mechanisms.
